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CAFA Law Blog Information, cases and insights regarding the Class Action Fairness Act of 2005

Lazy Defendants Lost The Second Chance

Posted in Case Summaries

Moncada v. Petroleum Geo-Servs., No. 1:11–cv–1352 AWI JLT, 2011 WL 5101907 (E.D. Cal. Oct. 25, 2011).

A District Court in California held that while calculating the value of the injunctive relief, the calculation should be limited to those employed at the time of filing the suit because the former employee class members do not possess standing to pursue injunctive relief as they would not benefit from the injunction.

The plaintiffs, who worked on jobs involving seismic inspection in Kern County and elsewhere, brought this wage and hour class action against the defendants, Petroleum Geo–Services (“PGS”) and Geokinetics, Inc.

Geokinetics acquired PGS in April 2010, and the plaintiffs’ employment was continued by Geokinetics. The plaintiffs sough to represent two subclasses of employees: those who worked for PGS from June of 2009 to April 2010 and those who worked for Geokinetics as of April 2010.

The plaintiffs alleged that from June 2009 until April 2010, PGS violated California Labor Code by: (1) failing to provide meal and rest breaks during shifts of more than ten hours; (2) failing to pay employees for missed meal and rest breaks as well as for earned double time pay (i.e. more than 12 hours per day or more than eight hours on the seventh consecutive day of work); (3) failing to provide employees with “accurate” itemized statements. Likewise, the plaintiffs contended that Geokinetics failed (1) to provide meal and rest breaks and then failed to pay for these missed breaks; and (2) to pay its employees for all wages due at termination. 

The defendants removed the action to the federal court under CAFA. 

The plaintiffs moved to remand arguing that the defendants failed to establish that the amount in controversy was over $5 million, which the District Court granted.

As the plaintiffs’ complaint did not allege a specific amount in controversy, the defendants provided the declaration of Geokinetics’ HR Director to assist in damage calculations. The declarant stated that between June 2009 and the present, approximately 150 individuals had worked or were working in California as non-exempt employees for PGS and/or Geokinetics; however, she did not set forth the number of employees currently employed by Geokinetics who were putative class members. She failed to provide the number of putative class member-employees hired by Geokinetics after it acquired PGS, or when they were hired. Likewise, she did not provide any information as to the hourly rate earned by the current employees nor did she offer any information about whether the average hourly rate of $9.80 earned by the four named plaintiffs was a reasonable estimation for the average hourly pay earned by the class. 

Specifically, to calculate an estimate of the damages for the “Double Time” violations, the defendants assumed that each named plaintiff worked 38 out of the possible 48, 7–day work weeks during the period from June 2009 through April 2010, and assumed that PGS failed to pay each plaintiff one hour of double time pay for each day worked. The defendants then multiplied these hours with the plaintiffs’ hourly rates and arrived at $10,374 as the damage amount for each putative class member for the “double time” violation, by averaging the total amount calculated for the four plaintiffs. With the similar assumptions and calculations, the defendants arrived at $4,358.50 for the meal period violation, $4,358.50 for the rest period violation, and $3,600 for waiting time violation, which totaled to $26,691 including the double time violation. 

The defendants contended that because the complaint alleged that the named plaintiffs’ claims were “typical” of those in the class, the damages claim of the 150 class members would be $4,003,650. By adding 25% for attorneys’ fees, the defendants stated that the total amount in controversy was $5,204,745.

The Court found that the defendants’ lone declaration wasdeficient. Specifically, the Court remarked that although the declaration provided the hourly wage rates for each of the named plaintiffs, the defendants had not provided any evidence to support their allegations that the average hourly wages of the four named plaintiffs were representative of the average hourly wage of the class members. In contrast, the uncontroverted evidence preferred by plaintiffs showed that six former employees’ hourly pay rates ranged from between $7.50 to $8.75 per hour.  

Second, the Court observed that the defendants also failed to provide evidence that all of the 150 class members worked for both PGS and Geokinetics. In contrast, the plaintiffs’ evidence showed that 44 of the class members had worked for Geokinetics alone. 

The defendant Geokinetics next argued at the hearing that they were entitled to rely upon the factual allegations in the complaint, although they admitted that they were relying upon inferences that may be drawn based upon their interpretation of the complaint. They argued that they did not intend or understand that the plaintiffs or the Court would rely upon their figures and that they did not appreciate they were obligated to present accurate figures.  

Thus, the Court remarked that while estimating the amount in controversy, the defendants proceeded with assumptions that they knew to be unsound.  For example, when calculating the value of the injunctive relief, the defendants multiplied their damage figure $8,717 by 150 employees rather than limiting this calculation to the number of those employed at the time the plaintiffs filed suit. The Court pointed that former employee class members do not possess standing to pursue injunctive relief as they would not benefit from the injunction. Although Geokinetics’ counsel admitted at hearing that an accurate figure was readily available, he had not given any explanation for the failure to use it. 

The Court stated that the plaintiffs’ moving papers encouraged the defendants repeatedly to bring forward real numbers in opposition to the motion; however, the defendants did not. Accordingly, the Court declined to allow the defendants to reopen the motion to present additional evidence, and remanded the action to the state court.